Inflation Concerns Drive Gold Price Correction Amid Escalating US-Iran Conflict

Global gold prices fell at the close of trading on Monday (1/6/2026) local time, or Tuesday (2/6/2026) morning WIB, as inflation concerns intensified due to the escalating conflict in the Middle East. This situation has strengthened expectations that central banks will maintain tight monetary policies for a longer period.

According to Reuters, spot gold prices dropped by 1 per cent to $4,489.34 per ounce, after having reached a two-week high last Friday. Meanwhile, US gold futures slid 1.9 per cent to $4,506.30 per ounce.

The strengthening US dollar has also pressured precious metal prices, making gold more expensive for holders of other currencies, thereby reducing investor interest in the yellow metal.

“The expectation that interest rates will remain high for longer is likely to continue pressuring gold, unless bond yields stop rising and interest rates begin to stabilise or move lower,” said Wyckoff.

Geopolitical tensions have risen again after Iran stated it had attacked a US military base in response to Washington’s strikes on Iranian military targets last weekend. Nevertheless, US President Donald Trump stated that talks with Iran are still progressing rapidly.

Simultaneously, global oil prices have strengthened, triggering fresh concerns regarding inflation.